Markup vs margin — the mistake that costs tradies money
This trips up almost everyone. Markup is the % you add on top of your cost. Margin is the % of the final price that's profit. They are not the same number, and assuming they are quietly eats your profit.
Example: a job costs you $1,000 and you "add 30%". That's a 30% markup → price $1,300, profit $300. But your margin is only $300 ÷ $1,300 = 23%. If you actually wanted a 30% margin, you'd need to charge $1,429. That gap — $129 on one small job — is real money you'd be leaving on the table all year.
The formulas
- Price from margin: price = cost ÷ (1 − margin%) → $1,000 ÷ (1 − 0.30) = $1,429
- Price from markup: price = cost × (1 + markup%) → $1,000 × 1.30 = $1,300
- Margin from markup: margin = markup ÷ (1 + markup)
Markup vs margin quick reference
| If your markup is… | Your margin is… |
|---|---|
| 20% | 16.7% |
| 30% | 23.1% |
| 50% | 33.3% |
| 100% | 50% |
How to use this in a real quote
Add up everything the job will truly cost you — materials, your labour at your charge-out rate, any subbies, tip fees, consumables. Pick the margin you want. The price it gives you is your quote ex-GST; add 10% GST if you're registered. Don't forget to set aside money for tax on the profit (see the tax set-aside calculator).
Price the job, then send it
The margin is the hard part and you have just done it. Building the quote around it — line items, GST, terms, a deposit — is the part worth handing over.
Build this quote in Yamate → Free to try · no card · sign in with a link, no password to rememberWant the job before it is advertised? Homeowners post their problems in Who Do I Call? Australia, our free Facebook group. Answer one well and you are the tradie they ring. Join, help out, and put your business in front of the people asking.
Join the free group →
FAQ
What markup should a tradie add?
Many tradies aim for a 30–50% margin on a job, which is a 43–100% markup. Materials are often marked up 10–30% on their own. There is no single right number, so use the calculator with your real costs rather than a rule of thumb.
Is a 30% markup the same as a 30% margin?
No. A 30% markup gives you about a 23% margin. To get a 30% margin you need a ~43% markup. This is the single most common pricing mistake tradies make.
Should I show the markup on my quote to the customer?
No — customers see one price (or itemised line totals). Your markup/margin is your internal number for making sure the job is worth doing.
More free tools for tradies
General information for Australian businesses, not financial advice.